If you are struggling with debt repayments, you can access multiple debt reduction and elimination options. Usually, these options are provided by the government. However, states can also deliver their own designed opportunities for student loan borrowers. In this guide, we will focus on California Student Loan Forgiveness. We will particularly present two prominent programs available in the healthcare sector. If you do not work in this field, do not worry; this guide will also share some other options that more borrowers can qualify for.
California Student Loan Forgiveness Programs
While checking the California Student Loan Forgiveness information, you will see some programs available only for healthcare professionals. The reason behind this trend is that the Office of Statewide Health Planning and Develop created these programs with the aim of giving access to healthcare to a wider group of people in California.
We will talk about the two most famous programs- Physician Corps Repayment and California State LRP. In the following sections, we will also present general opportunities, such as loan discharge options, consolidation, refinancing, etc.
The Office of Statewide Health Planning and Development
Two of the programs that will be discussed in this guide are provided by the Office of Statewide Health Planning and Development. It is a not-for-profit organization that aims to give access to healthcare to more people of California, especially in places that lack healthcare facilities.
The organization achieves its goal by delivering scholarships or creating loan repayment plans for students and graduates in this field. Most of the available programs are funded through state grants or donations.
1. Physician Corps Loan Repayment Program
As mentioned before, the Office of Statewide Health Planning and Development provides some California Student Loan Forgiveness options for students and graduates to ease their debt challenges.
One of these opportunities is Physician Corps LRP, which has been accessible since 2003. This repayment program aims to increase access to primary care physicians in underserved areas.
We also mentioned that the programs are usually funded by donations, state grants, fees, etc. Hence, the STLRP funds come from the state’s license renewal fee and other fines and penalties. In general, the repayment program can grant huge benefits- as high as $105,000- in return for the direct healthcare service in an underserved area for at least three years.
Eligibility Conditions for This California Student Loan Forgiveness
Several conditions exist regarding the job details, workplace, or the debt for this student loan forgiveness opportunity. First, borrowers in California with federal or commercial debt can apply to this program if they have an M.D. (Medical Doctors) or D.O. (Doctor of Osteopathy) license. It is not surprising that the license should be valid and not restricted.
The borrower should deal with outpatient caring, but the emergency service can be an exception. Besides, it is necessary to provide full-time service in an eligible healthcare facility for at least three years. Full-time is defined as 40 hours of work per week. However, additionally, a minimum of 32 out of these hours should involve outpatient care. For obstetrics physicians, this condition is only 21 hours dealing with outpatient care.
Please, also keep in mind that the applicant cannot get this benefit if he/she already has an obligation for another Health Professions Education Foundation program. Besides, if the debtor has previously breached such a contract, he/she will not qualify. Lastly, one should apply on time for this program. In 2021, the application deadline was January 8.
Previously, we have mentioned that the applicant should have a valid license to practice. This license can be in various disciplines. Below, you can find some examples, but keep in mind that it is not a comprehensive list.
Source: 2020-2021 STLRP Grant Guide.
There also exist conditions for the healthcare facility where the borrower serves. As mentioned before, the aim of this program is to improve the accessibility of healthcare in underserved areas. Therefore, it is necessary that 50% or more percent of patients visiting the facility lack insurance or are insured by Medi-Cal.
This California Student Loan Forgiveness requirement is applicable whether the borrower works in a clinic or in a physician-owned/operated facility. In the latter case, an alternative to this requirement is that 50% or more patients receive benefits from publicly funded programs that aim to assist people earning less than 250% of the poverty line. Besides, in both cases, whether a clinic or physician-owned/operated facility, the service should focus on primary care. In the case of working in a clinic, it can be operated by a not-for-profit organization, public hospital, or a hospital that has a primary contract with the county government.
We understand that the eligibility conditions can be confusing as it involves many terms and technicalities. Therefore, it is advisable to use the official platform for this California Student Loan Forgiveness program and get more information. You can also check this function to see if your facility/worksite is eligible for the STLRP.
Another category of eligibility conditions belongs to the qualifications of the loan. First, the borrower should have a loan from a qualifying commercial or government organization. These loans should be for undergraduate or graduate degrees in health professions. A qualifying commercial lender is a lending institution examined and supervised by the government or state agency.
Keep in mind that consolidated loans can qualify for this California Student Loan Forgiveness program. However, if you utilize loan consolidation for the educational loan with a mortgage loan or another individual’s debt, your loan would no longer qualify.
Besides, personal credit lines, defaulted, fully repaid, or Parent PLUS loans are not eligible. One cannot also use this benefit for credit card obligations. However, if the borrower has deferment or loan forbearance status, they may access this benefit.
Details of Benefit
You may get a little impatient because, till now, we have mostly focused on eligibility conditions. Do not worry; now, we will discuss the most catchy part of this student loan forgiveness and repayment plan- the award. As mentioned, the funding comes from fines, penalties, license fees, or grants. Hence, each year, the Office of Statewide Health Planning and Development decides on the award amount based on the available funding.
Yet, the maximum award benefit is $105,000. The applicants can get the full award or a portion of it if they successfully qualify. The decision again depends on how well you meet the conditions and available funding level.
Additionally, keep in mind that the total benefit you receive cannot exceed the outstanding debt balance. One can apply and benefit from this California Student Loan Forgiveness program a maximum of three times. If successful, the applicant will receive the benefit check directly to his/her submitted address.
In return for this benefit, the applicants are required to perform service. The start date of the mandatory service is shown in the grant documents. As discussed above, this service should be full-time in a qualifying facility. Besides, one should deal with direct care. It means administrative duties do not qualify for such service obligation. During the service, one should work at least 45 weeks per year. Therefore, the applicant can take a maximum of 7 weeks of absence for holidays or personal reasons.
Moreover, the borrower is required to inform the organization (OSHPD) about the changes. For example, if they leave the job, they should immediately communicate this action. However, in case of small changes, like changed address, full-time status, workplace, absence time, etc., the applicant has 30 days to inform the organization.
Besides, at times of changes, the successful applicants should provide six progress reports during the three-year mandatory service. Usually, the deadlines for these reports are at the end of May and November each year.
The OSHPD created a centralized platform to manage applications. Therefore, borrowers in need of this California Student Loan Forgiveness opportunity should submit the application in a web-based e-application. First, they need to register as a user and then submit the information for the application. Keep in mind that you can apply to more than one program by using this platform. However, if you get awarded, you should choose one to provide the mandatory service obligation at a time.
In this app, one should complete nine sections to submit their wish to get awarded. These sections include general contact, personal information, as well as details of employment, training, debt, etc. Applicants need to get a lender statement to prove their debt and outstanding amount.
Once you apply, you need to wait for the final decision. Depending on the number of applications, the length of the review period can change. Applicants will receive the result notification from the same web-based e-app. If the result is negative, do not get disappointed. You can still apply in the next cycle.
Now that you know the conditions, expected benefits and obligations, application process details, you need to get familiar with evaluation criteria. In this way, the borrowers can maximize their chance to get this California Student Loan Forgiveness.
The OSHPD uses a special scoring model to evaluate the applicants and choose. In general, keep in mind that the organization can give preference to people seeking to support areas, not in the focus of other similar applicants. In other words, the organization wishes to distribute this benefit equally among different parts of the state. Hence, if you apply for regions that are not competitive- not many people apply to serve there- you can have more chances to get the benefit.
Yet, there exist many other funding priorities. For example, there are many points in the scoring model distributed for linguistic and cultural qualifications. The applicant that knows the language of the underserved area, adequately received cultural training, got at least three years of experience, or coming from an economically poor background will have a higher opportunity. It is advisable to check the STLRP guide for more details about the scoring model.
Do You Have More Questions?
It is understandable that the conditions of this California Student Loan Forgiveness program can be confusing. If you have more questions to ask, you can send an email to HPEF-Email@oshpd.ca.gov.
However, if you are unsure about your options and want to choose the most suitable program, you can contact the debt specialists, like those in Student Loans Resolved. Our debt experts will collect information about your financial standing and loans. After a thorough analysis of the conditions, they will recommend the best programs for you to get rid of the debt, or at least to reduce the obligations.
Keep in mind that if you qualify for this STLRP program, you will not be able to utilize any other HPEF program till you complete the mandatory service period. Hence, it has utmost importance to select the forgiveness opportunity with the highest benefit. Call us to make the right decision, together with experienced and skilled debt specialists.
2. California State Loan Repayment Program(SLRP)
Another program offered by the Office of Statewide Health Planning and Development is the California State Loan Repayment. Again, the goal of this student loan forgiveness is increasing access to healthcare in different parts of the state.
Therefore, it benefits borrowers who agree to provide service in Health Professional Shortage Areas (HPSA). The award amount of this program depends on the working hours and the number of obligatory service years. We will discuss the award in detail in subsequent sections.
Before moving to the award details, first, it is necessary to get familiar with the required qualifications. As a first requirement, the applicant should be a U.S citizen or national. It means naturalized individuals or the ones born in the U.S will be eligible. These applicants should, surely, have a license to practice healthcare in a qualifying workplace. In return for the benefit, the applicant should agree to serve either 2 or 4 years. The duration of mandatory service depends on whether the applicant works full-time or half-time.
Besides, qualifying applicants are the ones without any other service obligations. Even if you had an obligation before and breached it, you will not be eligible for this California Student loan Forgiveness opportunity. Moreover, you should not have faced any judgments for your federal student debt. Lastly, the applicant should be on any of the child support payments.
In the previous program- the STLRP- we provided a table of eligible disciplines and said that the list is not comprehensive. It means other disciplines could also qualify. However, in this section, the below table is comprehensive. In other words, only the applicants from these disciplines and specialties will qualify if they have valid/unrestricted licenses:
Source: 2020-2021 California SLRP Grant Guide
Qualifying Work Sites
As mentioned before, the program aims to increase access to healthcare facilities in Health Professional Shortage Areas. Therefore, it is not surprising that a qualifying workplace should be located in such an area. Meanwhile, it can be a publicly or privately owned(only if it is a not-for-profit) organization.
In more detail, the applicants in need of this California Student Loan Forgiveness program should agree to serve in a facility that gives access to healthcare to people living at or below double the poverty level. However still, the applicant should get a prevailing wage. Lastly, the organization should be able to match the award in excess of the applicant’s salary.
Another category of eligibility conditions belongs to the debt term. Such conditions are almost similar to the previously mentioned California Student Loan Forgiveness program- the STLRP. In more detail, the eligible loan should not be defaulted or repaid. The debt should be for educational purposes and taken from a qualifying lender.
Again, such lenders can be government agencies or commercial institutions monitored by the government or state. Keep in mind that this forgiveness opportunity does not cover the debt for credit card purchases, residency, primary care, personal lines of credit, etc.
Consolidating a qualifying loan with a debt of other people can eliminate the eligibility.
Borrowers can access a full or reduced award amount through this California Student Loan Forgiveness program. The amount of the award depends on many factors, including the working hours and the year of service. For example, both half and full-time applicants can receive up to a $50,000 award for the initial obligation period.
However, extending the service for two years will bring $20,000 to full-time applicants per year. This amount is $10,000 for part-time borrowers. It is also possible to extend the service period for three or more years. During these years, the award will be $10,000 and $5,000 for full-time and part-time applicants, respectively. These amounts are per year of service basis.
Sure, the repayment program requires a mandatory service in return. Different from the previous program, in this forgiveness opportunity, one can work full or part-time. Generally, full-time work requires 40 hours per week, and borrowers should work at least 45 weeks in a year. Meanwhile, part-time applicants should complete 20 hours of work per week, and again they should serve at least 45 weeks in a year.
The rest of the year- around 35 working days, or seven weeks, applicants can utilize a leave request for vacation, illness, or any other reason. Keep in mind that the OSHPD will prolong the obligation’s end date based on the absence days of the applicant exceeding the 35 day period. There are also changing requirements about the amount of direct care in outpatient basis service. Hence, it is better to check the official guide for more information.
A borrower has a right to change the work status from full-time to half-time with the permission of the OSHPD. However, the move from half-time service to full-time is not possible in the initial obligation period. Yet, if they decide to extend the service years, they will have a right to change the working hours, too.
Besides, there exist some communication obligations, too. For example, if the applicant quits the job or gets dismissed, he/she should immediately inform the OSHPD. In case of a change in address, contact information, practice site, or when taking an absence, the borrower has 30 days for informing. Lastly, for maternity, paternity, adoption level, or switch in the working hours(e.g., from full-time to half-time), the applicants have 60 calendar days allowance for communicating the decision.
The application process for the SLRP California Student Loan Forgiveness is similar to the previously mentioned program. Again, borrowers need to create a user in web-based e-application. After logging in, it will be possible to submit information and necessary documentation. As discussed above, you can apply to multiple programs by using this platform. However, you can only perform one service obligation at a time.
This student loan forgiveness program has a clear evaluation and scoring model, which can guide applicants about their chances to get the award. For example, if an applicant comes from an economically disadvantaged background, they get five points. The number of spoken languages, experience years, or the conditions of the primary care site- all affect the evaluation of the application. For more information, check the official guide of the repayment program.
What Happens Next?
Once the OSHPD reviews the applications, they will notify the borrowers through the same web-based e-app. Usually, the length of the review period depends on the volume of applications. If the application is successful, the borrower should start serving as agreed, from the date shown in the documents. Any previous work period will not reduce the mandatory obligation time.
During the obligatory service, the site administrator should provide an Employment Verification Form every six months. This form indicates the performance of the awardee and how many hours he/she works. The OSHPD will make the payment of the award to the awardee when it approves the submitted verification forms. The great news is that any amount paid to the applicant is not taxable. It means one does not need to pay additional taxes for the forgiveness/repayment benefit through this California Student Loan Forgiveness opportunity.
You should also keep in mind that if you breach the agreement, you will be required to recover the payments. Besides, if you want to apply for the extension, you should still meet the eligibility conditions. As long as you meet the eligibility, you can apply multiple times. Usually, the application period opens in July and ends in September.
However, keep an eye on the news and updates to see the exact application period. In case of questions related to this California Student Loan Forgiveness program, you can contact the officials through SLRP@oshpd.ca.gov.
What Other Options Exist?
The above-mentioned programs are designed to increase healthcare accessibility in different parts of California. However, it is understandable that if you do not serve in the healthcare area, you will not qualify for these programs. Instead, you need to find other programs that can reduce or eliminate the debt.
There might not be specific programs designed for Californian borrowers, but you can access the many governments designed forgiveness and repayment options. In the following section, we will discuss the possible options in short, but you can get more information through our blogs or by directly contacting our debt specialists.
1. The Public Service Loan Forgiveness
One of the most significant opportunities for federal educational loan borrowers is the Public Service Loan Forgiveness. If you work in the public sector, you can enjoy the forgiveness opportunity, though it is not the only condition. This program grants full forgiveness once the borrower makes 120 payments. These payments should be made for eligible loans while working in a qualifying position.
Currently, the program is at the center of media attention. President-elect Joe Biden mentioned in his student loan plan that the Administration wants to simplify this opportunity. In general, the plan proposes changing the structure of the forgiveness program. Instead of 10 years of commitment, borrowers will be able to get $10,000 debt forgiveness for every year of service. Applicants can enjoy this benefit up to 5 times. This change is only proposed, and in the near future, we will know whether it will be applied to the law or not.
2. Teacher Loan Forgiveness
Another alternative to California Student Loan Forgiveness is Teacher Loan Forgiveness. As its name suggests, borrowers who teach in qualifying workplaces can take advantage of this program. It is possible to get either a $17,500 or a $5,000 forgiveness benefit through this program. Usually, teachers in mathematics, science, or special education qualify for the maximum amount. Yet, there are many other eligibility conditions, and we advise you to check the official platform or contact us for more information.
3. Borrower’s Defense to Repayment
Biden’s Administration not only focuses on the Public Service Loan Forgiveness but also on Borrower’s Defense rule. This rule was designed during the Obama Administration, and it aims to help students that were victims of fraudulent schools. If the student was misled by the advertisements or enrollment advisors about the true cost of education, job replacement rates, etc., he/she could apply for forgiveness to get rid of the debt.
Unfortunately, during the Administration of Trump, this rule was delayed. Some applicants waited for a long time to get the Education Department to review their cases. Additionally, many borrowers still received rejections. Currently, Biden’s plan is returning the Borrower’s Defense rule to its prosperous days.
The great advantage of this program is that it does not require any service or action to be taken in return. The main idea behind the program is that if the applied degree is worth nothing, the student should not pay the debt for it. To summarize, if you faced a fraudulent action by the school in educational matters (not personal, like harassment), you could utilize this alternative to the California Student Loan Forgiveness program.
4. Discharge Programs
Discharge programs are similar to forgiveness in the sense that both of them can eliminate your debt fully. However, discharge options can be accessed only in specific situations. Currently, discharge for death, total and permanent disability, bankruptcy, closed school, etc., exist.
Unlike the forgiveness program, you do not need to take any action in return for the benefit, such as providing mandatory service. It is enough to prove eligibility. For example, in the case of a closed school, if the borrower does not transfer credits to the new school, he/she can avoid repaying the student debt. In total and permanent disability discharge, the borrower should provide documentation from reliable parties such as Veteran Affairs to prove his/her conditions. You can get familiar with these options through our blogs.
If you cannot get rid of the debt, it is time to think about ways to ease the repayment process. One of the best ways to reduce debt obligations is through consolidation or loan refinancing. We explain these techniques in the same section because they have some similar characteristics.
Consolidation involves combining federal loans into one. In this way, the borrowers deal with a single loan. Refinancing involves getting a new loan to cover all existing debt. The new loan can bring lower monthly payment amounts and interest rates. Hence, it can help the debtor to save some money. The consolidation can also lower the monthly payment amount because it usually prolongs the debt payback period. As you repay the debt for a longer period, you get reduced payments per month.
The above-mentioned alternatives to California Student Loan Forgiveness – discharge and federal forgiveness options- are available only to federal loans. Some private lenders can also deliver death or total and permanent disability discharge benefits. If you have a private loan, your options are limited compared to the federal debt. You can still apply to refinance or contact the lender to check which options you can access.